"Mine Is Bigger Than Yours" Hits Home

In the words of Mel Brooks' philosopher-producer Max Bialystock, "If you've got it, baby, flaunt it!" That's just what many Americans have been doing with their homes until the credit crunch brought down the curtain with record foreclosures.

Amid bailouts and interest rate freezes to keep the show going, a painfully apt book emerges to underscore that the housing crisis, despite what the politicians are telling us, is not only about greedy bankers, mortgage brokers and hedge funds.

The thesis of "House Lust" by Newsweek reporter Dan McGinn: "Owning a home has long been considered the fulfillment of the American Dream. But in the last decade, as the real estate market boomed, Americans’ fascination with homes turned into a frenzy. Everywhere we turned, people were talking about, scheming over, envying, shopping for, refinancing, or just plain ogling houses—in the process, we’ve transformed shelter from a basic necessity into an all-consuming passion."

For some, huge homes have become what Cadillacs were half a century ago, an emblem of conspicuous consumption, proof to the world that owners have "arrived." In 2005, the average newly built US house measured 2,434 square feet, as opposed to 1,000 feet in Britain, Italy and Sweden and the 750-foot shoeboxes in Levittown after World War II.

"Everyone knows the direct causes of the present housing collapse: low interest rates, lax mortgage lending, rampant speculation," Robert J. Samuelson writes in the Washington Post. "But the larger force lies in Americans' devotion to home ownership. It explains why government officials, politicians and journalists (including this one) overlooked abuses in 'subprime' lending. The home ownership rate was approaching 70 percent in 2005, up from 64 percent in 1990. Great. A good cause shielded bad practices. The same complacency lulled ordinary Americans into paying ever-rising home prices."

The crisis may slow down builders in affluent areas from tearing down adequate houses and replacing them with "MacMansions" that not only require higher costs for upkeep but contribute to global warming with the energy consumed to heat and cool them.

As Congress and the White House push along legislation to head off a recession, a report on economic overreaching may be in order to remind Americans that, even in building their castles, less may be more.

A Backward Presidency

George W. Bush started out to be Ronald Reagan, morphed into Richard Nixon and, toward the end, is starting to resemble Herbert Hoover.

The shanties, shacks and cardboard shelters in communities spawned by the Great Depression and known as Hoovervilles are showing up in 21st century America as a result of the sub-prime mortgage crisis that has doubled foreclosures of homes in the past year.

"Between railroad tracks and beneath the roar of departing planes," Reuters reports, "sits 'tent city,' a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.

"The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis."

Not only are homeowners being dispossessed, but tenants are, too. A California realty firm estimates 20 percent of foreclosures are on homes bought as investment properties. Even after paying their rent, tenants are getting little notice before being evicted.

As former Federal Reserve Chairman Alan Greenspan takes most of the heat for not foreseeing the crisis, Paul Krugman points out the Bush Administration's share of the blame:

"Consider the press conference held on June 3, 2003--just about the time subprime lending was starting to go wild--to announce a new initiative aimed at reducing the regulatory burden on banks. Representatives of four of the five government agencies responsible for financial supervision used tree shears to attack a stack of paper representing bank regulations. The fifth representative, James Gilleran of the Office of Thrift Supervision, wielded a chainsaw...

"Two months after that event the Office of the Comptroller of the Currency, one of the tree-shears-wielding agencies, moved to exempt national banks from state regulations that protect consumers against predatory lending."

After weakening the patchwork of federal agencies to let banks run wild with loose loans, Bush, like Hoover, is responding with government action that is too little and too late. A Treasury Department plan to freeze mortgage rates has been deemed a failure even before it is in place.

It's a little like watching a lowlight reel of the 20th century being played backward at warp speed.